DIRECTORS' REPORT Your Directors have pleasure in presenting their 134th Annual Report on the affairs of the Company together with the Audited Statement of Accounts for the year ended 31st March 2015: OVERALL PERFORMANCE AND OUTLOOK During the year under review, the Sales and Other Income decreased by 6.05% from Rs. 84,109,785/- to Rs. 79,015,904/-. The profit after tax was down by 36.69% from Rs. 11,460,635/-. to Rs. 7,255,710/-. The profit before tax for the year ended 31st March 2015 was at Rs. 8,059,997/- (previous year Rs. 13,756,256/-). The Company is exploring various options to improve performance in the coming year. Reserves of the Company was at Rs. 151,899,001/- as on 31st March 2015. DIVIDEND Your Directors are pleased to recommend for your consideration a Dividend of Re. 1/- per equity share i.e. @ 10% (previous year Re. 1/- per equity share) on the paid-up equity share capital of your Company. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirements under Section 134(3)(c) of the Companies Act, 2013 (the Act) with respect to the Directors' Responsibility Statement, your Directors, based on their knowledge and belief and the information and explanations obtained, confirm that: (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) accounting policies are selected and applied consistently and judgments and estimates are made that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company for the financial year ended 31st March 2015 and of the profit and loss of your Company for the financial year ended 31st March 2015; (c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities; (d) annual accounts are prepared for the financial year ended 31st March 2015 on a 'Going Concern' basis; (e) internal financial controls have been laid down and followed by your company and that such internal financial controls are adequate and were operating effectively; (f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DECLARATION OF INDEPENDENT DIRECTORS Pursuant to section 134(3)(d) of the Act, your Company confirms having received necessary declarations from all the Independent Directors under section 149(7) of the Companies Act, 2013 declaring that they meet the criteria of independence laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges. SECRETARIAL AUDIT REPORT Secretarial Audit Report issued by Ragini Chokshi & Associates, Practising Company Secretary (CP No. 1436) is annexed to this Report and forms part of this Annual Report. INSURANCE All the assets of your Company, including Plant & Machinery, Buildings, Equipment etc. have been adequately insured. DEPOSITORY Your Company's shares are tradable compulsorily in electronic form and your Company has established connectivity with both the depositories, i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). ELECTRONIC VOTING Your Company has entered into an agreement with NSDL and CDSL for providing facility of e-voting to its shareholders. For the year 2014-15, your Company has availed services of CDSL for providing facility of remote e-voting to its shareholders for casting their vote electronically. PUBLIC DEPOSITS Your Company has not invited or accepted any Public Deposits during the financial year under report. DIRECTORS Pursuant to the provisions of the section 161 of the Companies Act, 2013 read with Article 107 of the Articles of Association of your Company, Mrs. Shalini D. Piramal is appointed as an Additional Director and Whole-time Director designated as Managing Director and she shall hold office only up to the date of this Annual General Meeting and being eligible offer herself for appointment as Director. Mrs. Shalini D. Piramal is proposed to be appointed as a whole-time Director of your Company for a period of 5 years with effect from 26th March 2015. Pursuant to the provisions of the section 161 of the Companies Act, 2013 read with Article 107 of the Articles of Association of your Company, Mr. Rajkumar Kataria is appointed as an Additional Director and he shall hold office only up to the date of this Annual General Meeting and being eligible offer himself for appointment as Director. Mr. Rajkumar Kataria is proposed to be appointed as an Independent Director of your Company for a period of 5 years with effect from 14th August 2015. Mr. Maneck Davar ceased to be the Director of your Company with effect from 29th July 2015. Your Directors wish to place on record their appreciation for the guidance and inputs provided by Mr. Maneck Davar during his tenure as a Director of your Company. Mr. M. K. Arora, Director of your Company retires by rotation and being eligible offers himself for re-appointment. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, information on the Directors seeking appointment/re-appointment is provided as a part of the Notice convening the ensuing Annual General Meeting. BOARD EVALUATION Pursuant to section 134(3) of the Act read with Schedule IV thereto and in terms of clause 49 of the Listing Agreement with the Stock Exchanges, your Company has set up a policy for the performance evaluation of all Directors. Performance of each of your Directors is evaluated basis several factors by the entire Board excluding the Director being evaluated. Your Company has also set up Performance Evaluation Policy for its Independent Directors and Executive Directors interalia which include independent view on Key appointments and strategy formulation, safeguard of stakeholders interest, raising concerns, if any to the Board, update of skills and knowledge, strategic planning for finance and business related, operational performance level of the Company, qualification and leadership skills etc. The Board of Directors of your Company discusses and analyses its own performance on an annual basis, together with suggestion for improvements thereon based on the performance objectives set for the Board as a whole. The evaluation of all the Directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The Board approved the evaluation results. Your Company has formulated a separate Evaluation Policy for its Board members, which is available on the website of your Company. None of the independent directors are due for re-appointment. TRAINING OF INDEPENDENT DIRECTORS The Board members are provided with necessary documents/brochures, reports and internal policies to enable them to familiarise with your Company's procedures and practices. Periodic presentations are made at the Board Meetings and the Board Committee Meetings on business and performance updates of your Company, global business environment, business strategy and risks involved. Quarterly updates on relevant statutory changes and landmark judicial pronouncements encompassing important laws are regularly circulated to your Directors. Every new Independent Director of the Board attends an orientation program to familiarize the new inductees with the strategy, operations and functions of your Company. The Executive Directors / Senior Management Personnel make presentations to the inductees about your Company's strategy, operations, products, markets, finance, human resources, technology, quality, facilities and risk management. Further at the time of appointment of an Independent Director, your Company issues a formal letter of appointment outlining his/her role, function, duties and responsibilities as a Director. The format of letter of appointment is available on the website of your Company. Your Company has set up a separate Familiarisation program for newly appointed Independent Directors and the same is available on the website of your Company. CODE OF BUSINESS CONDUCT AND ETHICS FOR DIRECTORS/ MANAGEMENT PERSONNEL The Code of Business Conduct and Ethics for Directors/Management Personnel ('the Code'), as adopted by the Board, is a comprehensive Code applicable to Directors and Senior Management Personnel of your Company. The Code, while laying down in detail, the standards of business conduct and ethics also deals with governance aspects. A copy of the Code has been uploaded on your Company's website www.kempnco.com The Code has been circulated to Directors and Management Personnel and its compliance is affirmed by them regularly on an annual basis. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW Your Company's Board of Directors met five times during the financial year under review. A calendar of Meetings is prepared and circulated in advance to your Directors. During the year under report, five Board Meetings and four Audit Committee Meetings were convened and held. The intervening gap between the two Meetings was within the period prescribed under the Companies Act, 2013. KEY MANAGERIAL PERSONNEL The Key Managerial Personnel of your Company are Mrs. Shalini D. Piramal, Managing Director (w.e.f. 26th March 2015), Mr. Sunil Kumar Gupta, Chief Financial Officer and Mr. Kunal Chhatwani, Company Secretary. AUDITORS Statutory Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Statutory Auditors hold office till the ensuing Annual General Meeting and being eligible, have expressed their willingness to continue, if so appointed. As required under the provisions of Section 139 and Section 141 of the Companies Act, 2013, your Company has received a written certificate from the Statutory Auditors proposed to be re-appointed to the effect that their re-appointment, if made, would be in conformity with the limits specified in the said Section. The Report does not contain any qualifications, reservations or adverse remarks. A proposal seeking their re-appointment is provided as a part of the Notice convening the ensuing Annual General Meeting. Internal Auditors M/s. Suresh Surana & Associates LLP were the Internal Auditors of your Company for the financial year 2014-15. Based on the recommendation of the Audit Committee of your Company, the Board of Directors of your Company has appointed M/s. Suresh Surana & Associates LLP as the Internal Auditors of your Company for the financial year 2015-16. Secretarial Auditors Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company had appointed M/s. Ragini Chokshi & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of your Company. The Secretarial Audit Report for the financial year 2014-15 forms part of the Annual Report as Annexure A to the Board's report. The Report does not contain any qualifications, reservations or adverse remarks. The Board has appointed M/s. Ragini Chokshi & Associates, a firm of Company Secretaries in Practice, as the Secretarial Auditors of your Company for the financial year 2015-16. VIGIL MECHANISM Your Company has established a Vigil Mechanism Policy for your Directors and employees to safeguard against victimisation of persons who use vigil mechanism and report genuine concerns. The Audit Committee shall oversee the vigil mechanism. INTERNAL FINANCIAL CONTROL The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial disclosures. MATERIAL SUBSIDIARIES Your Company does not have any subsidiary. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES Your Company has established a Policy for determining related party transactions. The Audit Committee oversees the related party transactions. The Related Party Transaction Policy is available on the website of your Company. None of the transactions with any of related parties were in conflict with your Company's interest. Attention of members is drawn to the disclosure of transactions with related parties set out in Note No. 25 of the Financial Statements, forming part of the Annual Report. Your Company's major related party transactions are generally with its holding company. PARTICULARS OF EMPLOYEES & EMPLOYEE STOCK OPTION SCHEME Your Company has no employee whose remuneration details are required to be provided under the purview of the provisions of Section 197(12) of the Companies Act, 2013 (the Act) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. During the year under review, no stock options have been granted by your Company. Accordingly, no new equity shares have been allotted under the Employee Stock Option Scheme. Hence, no disclosure under the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 have been made during the year under review. SIGNIFICANT AND MATERIAL ORDERS Your Company has received an order from Delhi High Court to vacate the premises held by the Company on tenancy basis at Connaught Place, New Delhi. The said shop premises have been vacated on 30th July 2015. This will have an impact on the future operations of the Company in trading business. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND In terms of Section 125 of the Companies Act, 2013, any unclaimed or unpaid Dividend relating to the financial year 2007-08 is due for remittance to the Investor Education and Protection Fund established by the Central Government on 30th September 2015. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013 There were no loans, guarantees or investments made by your Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable. ANNUAL RETURN The extracts of Annual Return pursuant to the provisions of Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 in the prescribed Form MGT-9 is annexed herewith as Annexure B. 1. A brief write up on the Human Resource Department and initiatives taken during the year 2014-15 Your Company is in the process of setting up a formal Human Resource Department for initiating various steps for induction and training of the employees. The employee strength as on 31st March 2015 was 8. 4. The percentage increase in the median remuneration of employees for the financial year 2014-15 is at 10.06%. The percentage increase in the median remuneration is calculated for comparable employees and does not include employees who were not eligible. 5. Your Company considered the following factors while recommending the increase in compensations. 1. Financial performance of your Company 2. Sales growth of your Company during the year under review 3. Salary Benchmarking against peer companies 4. Industry benchmarks 6. Your Company provided an average increase in remuneration of 10% to Key Managerial Personnel against an overall average increase in median salaries of 10.06%. 7. The comparison of remuneration of each of the Key Managerial personnel against the performance of your Company is as below: Managing Director: Nil% of net profits for the year 2014-15 Chief Financial Officer: 2.51% of net profits for the year 2014-15 Company Secretary: 0.49% of net profits for the year 2014-15 8. There is no variable payout for Directors. 9. There are no employees of your Company who received remuneration in excess of the highest paid Director of your Company. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO As the Company is not engaged in any manufacturing activity, there are no particulars to be disclosed under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 as regards conservation of energy or technology absorption. Further, during the year under review, the Company has neither earned nor spent any foreign exchange. INDUSTRIAL RELATIONS Industrial relations remained cordial throughout the year under review. ACKNOWLEDGEMENT Your Directors wish to place on record their appreciation for the dedicated services of the employees of your Company at all levels. By Order of the Board of Directors Rajan Sanghi Director DIN : 00275842 M. K. Arora Director DIN : 00031777 Place: Mumbai Dated: 14th August 2015 |